Mylan (MYL) Stock: Should You Buy The Dip?

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Mylan Inc (NASDAQ: MYL)

Mylan has had a rough time in the market as of late, and for good reason. The company’s product, Epipen has taken center stage among news outlets thanks to recent price hikes, and that’s concerning investors. As a result of the pressure, the company announced new programs that will likely cost them some money. Nonetheless, many believe that the story presents an opportunity; but should you buy the dip? Today, we’ll talk about the EpiPen issues, what we’re seeing in the market today, and what we can expect to see from MYL moving forward. So, let’s get right to it…

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MYL Faces EpiPen Blues

As mentioned above, Mylan has had a rough time in the market as of late, thanks to issues associated with the EpiPen. The Epinephrine injection is designed to treat severe allergic reactions on demand and has saved many lives to date. However, recent price hikes have made it hard for many to get their hands on the injection. I’ll admit, I cringed when I recently filled my prescription at a cost well over $700. Nonetheless, the company has done two things that will likely help patients in need. Unfortunately, at the same time, the actions taken will also likely cut into the company’s bottom line. Here’s what we’ve seen:

  • Discount Card – First and foremost, MYL has moved forward with an EpiPen Savings Card. This card is worth $300 and is accepted like cash at the pharmacy. However, this wasn’t enough to address the full issue, as even with this discount, the EpiPen is out of reach for many.
  • Generic – More recently, MYL announced that it will be launching the first generic EpiPen. The new product will come with a list price of $300, which represents a tremendous savings. Perhaps more importantly, the company announced that the generic product will be identitical to the branded product with regard to both drug formulation and device functionality. In a recent press release, the company had the following to offer with regard to the generic EpiPen product:

(Mylan) will launch the first generic to EpiPen Auto-Injector (epinephrine injection, USP) at a list price of $300 per generic EpiPen two-pack carton, which represents a discount of more than 50% to the Mylan list price, or wholesale acquisition cost, of the branded medicine. The authorized generic will be identical to the branded product, including device functionality and drug formulation.”

How The Stock Reacted To the News

While the new generic option for the EpiPen is being released as damage control, the move actually isn’t being looked at in much of a positive light by investors. After all, a generic version will likely cost the company money in the long run. Recently, MYL has been taking a dive on the pricing issues, and now, it seems as though investors are still somewhat unhappy with the solution. Currently (11:20), the stock is trading at $42.90 per share after a loss of $0.13 per share (0.30%) thus far today.

Is Now The Time To Buy?

The great Warren Buffet has said a lot of things. However, one of the most important things he’s ever let other investors in on was that they should buy when fears are high and sell when greed is high. At the end of the day, lower priced EpiPens aren’t the best thing in the world for MYL, however, it’s not horrible news either. The truth is that, in many ways, Mylan has missed out on sales due to high pricing. While lower pricing options may cut into the bottom line, they may also lead to stronger sales volumes, making it a wash. Personally, I believe that the market reaction to the news is a bit absurd. After all, the company gave up $3 billion in market cap over the past week. At this point, MYL is far oversold and screaming opportunity, if you ask me.

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What Do You Think?

Where do you think MYL is headed moving forward and why? Join the discussion at TalkTRENDZ!

[Image Courtesy of Good Free Photos]

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